South Korea’s industrial production rose in December compared to that in the previous month, continuing the period of expansion for the last three months, as a rise in domestic demand offset the weakness in export orders.

According to the data released Wednesday by the Korea National Statistical Office, industrial production, which measures the change in the total inflation-adjusted value of output produced by manufacturers, mines and utilities, climbed 1.0 percent in December from 2.6 percent in the previous month on a seasonally adjusted basis.

The industrial output rose 0.8 percent in December compared that in the same month last year, but down from a 3.2 percent rise in November.

Meanwhile, the service sector output grew 0.1 percent month-on-month and 1 percent from the same period a year ago.

The report has come at a time when Asia’s fourth largest-economy is reeling under pressure from a weak demand from the foreign markets. A delay in economic recovery in the U.S. and China is crippling the South Korean economy with a decline in export orders while the euro zone debt crisis is dogging the recovery in economic growth.

The strengthening of the South Korean won against the U.S. dollar and the weakening of the Japanese yen have weighed heavily on the exporters.

According to the Bank of Korea, South Korea's current account surplus fell to the lowest level in eight months in December as the local currency's rise weighed on exports.  The surplus narrowed sharply to $2.25 billion in December from a revised $6.91 billion in the previous month.   

The government has taken several measures to spur economic growth and the domestic economy is showing signs of recovery as the manufacturing and mines output expanded in December.

“Output is better because of an improving domestic economy,” An Ki Tae, a Seoul-based economist at Woori Investment & Securities Co, was quoted as saying by Bloomberg.

The country's economy is expected to grow about 2.8 percent this year. It grew 2 percent in 2012, the slowest growth in three years, the central bank said. 

The bank had earlier cut its growth outlook for 2013 to 2.8 percent from 3.2 percent.